Wedbush Upgrades Natera Following Sell-Off

• The share price of Natera Inc. NTRA has declined more than 41 percent over the past three months, from the peak of $21.88 in July.
• Wedbush’s Zarak Khurshid has upgraded Natera from Neutral to Outperform, while maintaining a price target of $20.
• The risk/reward profile of the stock is attractive, following the recent sell-off, according to Khurshid.

Analyst Zarak Hurshid stated, “We believe the company’s fundamentals are largely unchanged and expectations are reasonable for 2015 and 2016,” while mentioning that the consensus and estimates for 2016 remain below the guidance.

Following the investor meetings organized by Wedbush with the company’s CFO and VP of Commercial Operation in August, “we were encouraged recently following investor meetings with management and the incremental progress with “average risk” payor coverage,” Khurshid explained.

According to the Wedbush report, the meeting showed that the business seemed to be on track, making better progress with the recognition of microdeletion testing with ACOG. Khurshid expressed optimism regarding the “average risk coverage policies announced by Blue Cross plans and checks suggesting coverage policies from additional payors are imminent.”

Khurshid also believes that an in-network contract announcement, expected in the near term, and new average risk coverage policies would drive the stock valuation.

“A microdeletion performance publication, faster conversion of the average risk NIPT opportunity, in-network contract announcements and cancer pipeline progress represent relatively near term potential positive catalysts,” the Wedbush report added.